Thorns among roses in U.S. housing picture

When it comes to the state of the economy, the folks who manage American counties, cities and towns are seeing a glimmer of light at the end of a dark tunnel.

For some, it's a ray of hope, a promising signal that improving fortunes are around the bend.

For others, it's a dire warning that an onrushing freight train of debt is about to crush them.

Thirty-three municipal jurisdictions in the Land of the Free have filed for bankruptcy since 2010.

Stockton, Calif., with a population of 300,000, is the largest, and latest, city in the country to file.

Jefferson County, Ala. struggles with a debt of $4.23 billion, much of it attached to the county's sewer system. Its 600,000 residents, many of whom live in Birmingham, a hotbed of civil-rights activism in the '50s and '60s, now have to deal with the largest municipal bankruptcy in U.S. history.

Harrisburg, Penn., is saddled with debt topping $300 million, much of it resulting from a failed waste-to-energy processing facility (Metro Vancouver municipalities take note).

Across the country, thousands of municipal employees have been laid off, or face layoffs. And retired police officers, firefighters and others worry their pensions and health care plans will be slashed.

In August, 2007, I wrote a Sun column about the U.S. subprime mortgage debacle, where many factors contributed to nightmarish experiences for American families who got in over their heads.

There were more than enough pieces from the pie of blame to go around.

Oversight authorities blamed lenders for predatory practices, mortgage brokers for steering buyers into unaffordable mortgages, appraisers for inflating property values, investors for backing subprime mortgages without proper due diligence, and homebuyers for overstating incomes on loan applications and assuming heavy debt they could not possibly service.

A year later, in another Sun column, I wrote that some American municipalities, heavily reliant on development fees to pay the bills instead of increasing taxes across the tax base incrementally over time, had been forced to sell their investments because the development revenue stream dried up.

In 2005, U.S. housing starts topped two million, the highest number since 1972, a leap year in which comedian George Carlin was arrested for public obscenity for reciting the "seven words you can never say on television." Anyone remember George, or his seven words? How far, or low, we have come.

Anyway, from the heady days of 2005, the roller-coaster ride began. U.S. housing starts, from 2006 to 2012, went from 1.8 million to 1.3 million, to 903,000, to 553,000, to 585,000, to 611,000, to 781,000.

The 2013 forecast is for 1.1 million starts. Municipalities, happy the housing market is recovering, are working with the development industry to cut red tape and expedite opportunities.

Also, the Washington, D.C.-based National Association of Home Builders (NAHB) is encouraged by recent data from its monthly Improving Markets Index. Three-quarters of all metropolitan areas tracked in the housing index report upswings in both home sales and price appreciation.

There are always thorns among the roses, however.

The NAHB is concerned tight mortgage-lending standards, brought in as a healing salve following the subprime meltdown, are preventing well-qualified buyers from obtaining mortgages, which is impeding the housing recovery.

Meanwhile, here in the land of cherry blossoms and 25-year mortgage amortization periods, housing starts for the first quarter of 2013 are down 14 per cent from the same three-month period last year.

Canada Mortgage and Housing Corp. reported last week that Vancouver-area housing starts totalled 3,980 during the January-to-March period, compared to 4,631 during the corresponding quarter in 2012. Single-detached starts (843) were up 20.4 per cent, while multi-family starts (3,137) dropped 20.2 per cent.

Perhaps it's time for federal Finance Minister Jim Flaherty to consider raising the mortgage-amortization period back to 30 years for well-qualified homebuyers. Lending institutions are being particularly sticky with mortgage money these days anyway, so leave the gate-keeping duties to them.

Such a move would be welcomed by homebuyers - first-timers or otherwise - who hold down secure, well-paying jobs and are diligently keeping household debt to manageable levels.

Finally, I have a question for provincial party leaders Christy Clark, Adrian Dix, John Cummins and Jane Sterk: If elected, will your government raise the exemption threshold on the property transfer tax from $425,000 to $475,000 for first-time homebuyers?

I really don't expect an answer. When I asked a simple question before the last provincial election, the Liberals and NDP did answer, then the winner waded into hot water two months after the election.

You remember. The HST.

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